The secret to the sharing economy: ‘You don’t want the drill — you want the hole’

Neal Gorenflo had his come-to-Jesus moment with the sharing economy in a parking lot in Brussels.

It was June of 2004, and Gorenflo was well on his way to becoming a bona fide suit. He had worked in the telecommunications business and for an investment bank. Now he was on a strategy team for the global shipping company DHL, up for a promotion, and on a business trip in Belgium — and he just couldn’t live with himself.

“On the surface everything looked great,” Gorenflo says. “But I felt disconnected from my community and my potential and my loved ones. I went for a jog outside my hotel. I projected myself into the future and I saw a mountain of regret. I stopped in the parking lot of this industrial warehouse and I started to cry.”

That was the breaking point, Gorenflo says. He ran back to his hotel room, resigned from his job on the spot, and vowed to “make a world where people felt like they were part of something meaningful.” He didn’t call it the sharing economy then, but it turns out that’s what he was after, and with a little work, he found it.

A. I didn’t know what I was going to do when I got back [from Brussels]. I looked for consulting gigs and startups doing sharing work. I also organized a monthly salon about sharing and collaboration called Abundance League. We did it every month for five years. There were 20 to 40 people at each meeting, and at the beginning, we would have a gift circle — you would say what your passion is, what your gifts are. After everyone does that, you really get to know people and what they’re all about. And they get to know you — sometimes better than you do.

I literally open-sourced my career. My friends knew who I should talk to and where I should go. They moved me around like a chess piece. That’s the kind of community we built.

Q.Isn’t all this sharing and gift circle stuff a little “kumbaya” for contemporary America?

A. The thing is this: The life experiment I ran with Abundance League upended some core assumptions that I held and that are widely held in our culture — that competition, accumulating possessions, and pursuing your own self-interest results in the good life. I found out firsthand something completely different — that collaborating with peers to maximize common good was much more fun and meaningful.

There’s nothing kumbaya about it. It’s just a better life. And it’s nothing new. Wisdom traditions throughout the world speak of the salvation found in serving the common good. What is new is that peer-to-peer social relations and dynamics are ascending and could become the dominant way of life.

A. My wife, Andrea, and I started a childcare coop and a monthly parents potluck which brought people from the coop together, but also other parents from the neighborhood. We also did a babysitting coop: If Andrea and I wanted to go out on a date, one of the other parents would babysit, and we’d do the same for them.

I donated my car — my surf wagon, an old Volvo — to charity. I became a train commuter and a biker and tried peer-to-peer car sharing for first time. We save $4,000-5,000 a year on car expenses.

Q.You also pulled some of your money out of Wall Street, right?

A. I started to make the shift that year to social lending. I have probably 15 percent of my savings in Prosper and LendingClub. The basic idea is that you can safely lend to strangers. They have credit ratings on everyone. [To minimize your risk,] they encourage you to lend a tiny amount of money on many loans. I use a heuristic: Invest a tiny bit of money in the smallest loans. I’ll make $25 investments in a collection of $5,000 loans. So far, I’m averaging about 9 percent return. I like it because that’s close to the long-term average of stock market return but without the volatility, and I feel like it’s less risky.

Q.Let’s talk about these dog sharing websites for a minute. At what point does “sharing” become “free dog care”?

A. [Laughs] Some of these things I just scratch my head at. But I think what’s interesting here is, why not try it? The cost to start an internet startup has gone from millions to thousands. It used to be, you’d spend millions on market research. Now, why not just put the site up? Look at Airbnb: It sounds nuts to rent out a spare room or a mattress on the floor, but you could try it out really easy and they made a success out of it. And coworking: When it first started out, it sounded nutty — a bunch of strangers sitting in a room working together — but it has gone viral globally.

A. Sharing works best when you have high-value assets that have a lot of excess capacity — so your car, for example, which just sits there most of the time. Transportation is linked to accessing things of high value – work, leisure, education. Access to place is quite valuable. So ride sharing and car sharing companies have gotten a lot of funding.

Commercial space is also very high-value. That’s why coworking has taken off. Shareable is a small nonprofit. We could get our own office, but with all the furniture and phones and wi-fi, it would be pretty expensive. But here [Shareable staffers rent space at Hub SoMa in San Francisco], we can get all of the stuff that we need, on demand: the coffeemaker, the wi-fi, conference rooms — we can even rent space for an event.

With a thing like Neighborgoods, you’ve got two problems. The first problem is that you’re dealing with low-value assets. You don’t want the drill, you want the hole. But nobody shares drills, and I mean, shit, they’re like $30. Why not just buy one? It’s also really tough to get a two-sided market going.

Q.OK, so given the limitations, how revolutionary is this sharing economy business, anyway?

A. I believe the sharing economy is a fundamental shift in the way we produce and govern. Broadly speaking, it’s becoming more democratic. The cost of interactions and production are low enough that individuals and small groups now have the power that only large corporations had a few years ago.

Look at the whole “maker” movement: People now have shared access, through hacker spaces and all the open-source software, to a wide range of production tools like 3D printers, CNC routers. You can go to Brightidea and get an idea, prototype it at Techshop, where you have access to three-quarters of a million dollars in machine tools in practically every medium – plastic, metal, wood – and then you go on Kickstarter and get funded. Once you have a product, go on eBay, Etsy, or Shoplift and sell it. One person can become a manufacturer in weeks.

On one hand, it’s never been more difficult to find a job. On the other hand, it’s never been easier to create your own. We’re shifting from a top-down factory-style society to a peer-to-peer, network-driven society.

Q.And sharing is infiltrating our government, too?

A. San Francisco recently launched a “participatory budgeting” process. People in certain neighborhoods decide how a portion of the city budget gets spent. It’s very democratic. This actually started in Porto Alegre, Brazil, in the 1980s. It is already in 1,500 cities around the world, but it hadn’t spread to the U.S. Four cities in U.S. are now trying it out.

Q.As more of these sharing startups go corporate, does the sharing economy risk losing its soul?

A. I think corporations should get involved, but if they really want to build a thriving business, I think they have to recognize that people are after something different than an impersonal, closed experience, where the user doesn’t have any control or input into what happens.

Airbnb is the leader, and one of the reasons they gained popularity is that it is so different from hotels. At its best, Airbnb provides a unique experience that gets you connected to the local scene and local culture. As they scale, they risk losing that special quality. If Airbnb becomes just a better-looking version of VRBO, that’s bad for them and bad for customers as well.

Can corporations scale this culture that makes sharing so unique and fun? Maybe, but only if they recognize that what makes this so revolutionary is the shift from a consumer culture where everyone is judging and competing with each other to a collaborative culture where we look at each other as allies.